The Gold Road

The way you think about money is wrong.

Okay, that statement is purely there to pique the interest, I'm sorry. I think I can state with confidence, more accurately, that the way most people think about money colours how they perceive other monetary interactions.

We've all had money, haven't we? We have got it, and we have spent it. We have spent years earning it and working out how to earn more, saving it, exchanging it for goods and experiences. We probably have some with us now. Our lives are pretty much devoted to its acquisition, if only because it is our shortest, simplest way to comfort and security - which can often lead to big problems, but I digress.

The way we handle our funds, and their physical existence in our perception of the world, implants a quintessential untruth about how it works and how it circulates. The difference between budgeting and economics is that economics looks at the whole, while budgeting looks at the individual case. People don't study economics - they budget, and thus they have a great understanding of budgeting...

...but not necessarily of economics.

I am not formally educated on the topic. I have done a lot of reading, I have debated it with a great number of people that know a fair amount on the subject. All of this is opinion backed with some research, not given as evidenced fact - so please, utilise a pinch of salt during your reading.

Why do folks hate people on benefits so much?

Because the way they see it, these individuals are being rewarded for something. They are being given something, and they don't apparently deserve it (not as much as the complainant at least). We all know someone who thinks that those who don't work shouldn't get anything, because they've worked hard their whole lives, etc, etc, repeat ad nauseam.

We probably know more people that believe refugees and immigrants shouldn't be given anything at all. They will often use terms like "charity begins at home", despite giving very little to charity themselves, or "why should we", or "where is it going to come from". I don't think that everyone who believes this is racist. I think that there are people who are racist that use those terms to mask their less socially acceptable thoughts, but I think the majority of people who wish to withhold support for expatriates (as I will be referring to them from now on) are doing so because they think we can't afford it.

And who is to blame them. We are seeing public services get cut because we "can't afford them". This is a line that has been touted so often that people repeat it without even questioning it. Even in the face of actual displays of where money is being spent, and how much of it can be reallocated to those in need. As I often say: It is never about not having enough, only about misallocation.

The mistake we make is assuming that, when someone on Jobseekers receives the kings ransom of £72.40 to last them for two weeks, the money simply vanishes.

Which is absurd, when you think about it.

So let us assume that there is an individual who has no other source of income. They receive housing benefit that pays for 100% of their rent and jobseekers allowance that pays them the aforementioned £72.40 a fortnight.

(If you aren't in the UK, these two things are means-tested benefits given to you by the government for various reasons, which are paid for out of public taxes. The circumstances in which you are allowed either housing benefit or jobseekers allowance are regularly reshuffled and usually made tighter. The welfare of poor people is not in the interest of our current government.)

To begin with - housing benefit is paid directly to the landlord. (Edit: it was, for a time. Now it is paid to the recipient of the benefit - but it is probably paid on in rent, seeing as there's not a huge rash of people claiming housing that immediately become homeless. Thanks for the correction, Nick.) That landlord is more than likely some kind of housing group or business, which has lucrative contracts with the local council; or the landlord is a private individual who owns the property and is kind enough to rent to those being assisted by the state. Trust me: many don't.

So the housing benefit only benefits the person receiving it insofar as it gives them somewhere to live. Meanwhile it guarantees the landlord a return on their initial investment, after removing the costs of maintaining the property. Either the private individual has any net profit to spend on their own day to day lives, their own house, their groveries, their luxuries - or the group or business receives a net profit, which it uses to keep running and pay its employees, who again go out to pay their rent and buy their groceries and purchase their luxuries.

The jobseeker's allowance, £36.20 a week of it, gets spent - because people in poverty don't actually have the option to save. The margins of affording to eat and not are too small. Where does it get spent? Shops usually - local small concerns and chain stores.

The money spent there, after covering costs, pays the employees (and in the case of bigger stores the shareholders). They then spend that money in other shops and on other things. Once more, that money is allocated and spent. And over and over it goes.

What happens every time someone spends money?

Tax.

While the UK doesn't have sales tax like the US does, the vast majority of products bought and sold have a rate of Value Added Tax (VAT). It is invisible to us because it is included in the price on the box. If you've ever been to the US from the UK and been stung by the sales tax - like you went to buy a dollar soda and it turns out to be a dollar and five cents, but the label says nothing about it - then what occurs with VAT is the reverse.

Standard VAT rate is 20%. Some goods - goods for children, electricity and utilities - are charged at 5%. Some goods, like basic food and apparent "necessities", are totally exempt. (Apparently condoms are considered a necessity and tampons aren't, which is absolutely fucking ridiculous, but that is an outrage for another blog.) Some goods and services even have special taxes in and of themselves - fuel pays an extra 10-50 pence per litre on top of the 20% VAT, 6% on insurance, 20% on travel insurance, significant additional taxes on tobacco and alcohol above and beyond the 20% VAT rate.

Almost every time someone spends money, they pay tax back to the government, back to the public purse. £20 of the benefit recipient's money gets spent in a local shop - £2-4 of that goes to the government, the rest goes to the shop. Out of the rest, a portion goes on costs, and the rest goes into the pocket of the people that work in the shop, which gets spent elsewhere. Every time the money moves from point to point, an amount ends up in the same purse that is paying for the benefit recipient in question. Even if they can't afford a car, they take the bus - and the money they spend on the bus not only funds the driver's purchases that week, but also pays a significant amount of fuel tax right back to the government.

Then there's savings and investment. Now, the average recipient of benefits doesn't get enough to save anything - it's just not possible, as previously mentioned. Margins are too small. However - those who benefit from the money of those recipients (see what I did there) invest. They put money away for a rainy day. That money goes into banks, who - since the dissolution of the division between investment banks and savings banks - use it to invest and make money. Those banks don't pay taxes, but they do provide loans to people who do - and those loans are spent on things, which again attracts tax.

Always, always, it finds a way back. It leaves the public purse and flows through wallets and pockets and by inches and yards makes its way back.

"But John," I hear you cry, desperately pushing aside the crowding lobster pots filled with pokemon miniatures. "Doesn't this prove that trickle-down economics works?"

To you I say... nay nay.

See, as I have pointed out - those below a certain level of income can't invest. The money is needed for survival. It can't be squirrelled away in savings accounts, or used in share trading, or utilised in other financial instruments used to make large amounts of money. That requires a significant initial investment.

The money spent by those with a lot of it tends to stay within a certain circle of expenditure. I've blogged before about class and about those with high income. We can probably infer that high-value goods and luxuries are more their purview than anything you would buy in Pound Land. Likewise, the reason why "millenials aren't buying diamonds" is because they can't. They can't afford it. We can maybe squirrel away something in an ISA or a holiday fund. Cost of living has risen so much faster than wages.

But those big companies who sell a lot of products to those with lower income - I am loath to actually name any, as that is stereotyping, but I am sure you can think of your own - have wealthy shareholders who are not people who use those products. The inverse is not possible. DeBeers doesn't pay dividends to a bunch of minimum-wage folks; hell, it barely pays minimum wage to its own employees, but I digress.

Rich money may trickle down a little; but it trickles up far more. It's the money of everyday people that keeps the companies aloft, and lines the pockets of the shareholders and executives that are invested in them, and the politicos that they lobby. If it isn't money that they poured into the system, it is the product of their labour - every factory needs workers. It also bears consideration that those who are wealthy try and find ways to not pay taxes, while those who aren't, can't. Not really.

If the wealthy are made more wealthy by the money in the pockets of those who are not - and if the government is made more wealthy by the same - then...

...why aren't we giving more money to those that don't have much?

If we bring expatriates here, and if we look after them; if we fund the poor, and those on limited income; then not only will the government fund be further refurbished, but so will the companies that pay us our wages. If foreigners show up and they need houses, then build them. Sell them. Make money. Pay tax. Help the government. Help yourselves.

If I am to put my left-wing tendencies aside and speak in right-wing monetary terms: the poor and disenfranchised are an investment opportunity. Stop seeing them as scroungers and start seeing them as debt you can sell that WILL repay to you, sooner or later, in some way. The gold road will run and run, all the way through. Every step it takes, it feeds back into public funds. Sooner or later, it will have paid for itself in entirety - and paid some other people's way besides.

And hey - maybe if you put enough money in an expatriate's pocket, they might have something to save. Wouldn't that be nice for the banks?

I mean the only way you'd think this is a bad idea is if you were some kind of bigot.

Immigrant Song

This is the story of an immigrant.

He was born in Beirut, while the Lebanon was being bombarded by the Kreigsmarine. He spent his early years sleeping through the worst of it - once, one of his uncles suggested that he was either deaf or broken, as he managed to sleep through a building four doors down being shelled. As a child he spent a lot of time around the American embassy, even getting a Saturday job there, which let him see the films put on for the staff. It's here that his love affair with the staples of Western civilization began.

Throughout his teenage years he was something of a tearaway, despite being taught by rather brutal French nuns - if he misbehaved too much or spoke Arabic around them, he was forced to kneel on walnuts and recite the Lord's Prayer...in French. His father was dramatically older than his mother, a gap of attitude and sympathy as much as age, and died naturally of old age. At the time of his father's death, he was 12 - he became the man of the house, and left school to find gainful employment.

Throguhout the years he held down a great many jobs, a lot of them focused around driving and moving. He worked engineering in Saudi Arabia, famously a dry country, and managed to smuggle booze into the oil pipelines that he spent most of his work time constructing. As handy with a gun as he was a car, he got into several scrapes - though he always found a way to sneak off down to to Damascus once every so often to enjoy life with his friends and relatives.

Soon, though, the military air of the country became stifling. People were being herded off buses depending on their faith and were often not seen again, and tanks were parked on street corners. He left, as many other Lebanese folk did - the Lebanese Diaspora is a thing - and travelled through Europe. While his family spread to Australia and America, he settled in Italy, wherein he became a test driver and F3 driver for FIAT. He ran several successful seasons, spending time in Monaco and Le Mans, before a serious crash left him in a coma.

He didn't wake up until months later. He was still recuperating in hospital when his mother urged him to give up race driving. She made him promise, and promise he did.

Once more the man moved on. He went through France, but decided his final destination would be Australia. He just wanted to stop off to see a relative on the sleepy Isle of Wight in the south of England first - only intending on staying two weeks.

He fell in love with the place and its people; it took precious little for him to be convinced to settle. There were cultural differences of course - people in this new land didn't have guns, they drove slowly, and they wasted so much food - but that in itself had its charm. After all, not worrying that the next bus you got on would be your last was a luxury that most couldn't understand.

Knowing he'd need funds, he took as many jobs as he could hold down. He worked as a bouncer, a barman, a debt collector, a technical repairman, a delivery driver - in every job he gave his all, paid his tax and reaped his rewards. He sent money home of course, until he heard that his mother had been murdered. Another victim of the civil war.

He met a girl and settled down. They had their ups and their downs, but they worked - they both worked. They had to in Thatcher's England, especially if they were going to feed their young son. When their son was born, he was so proud, so heart-burstingly proud, that he was almost unwilling to let the doctor perform preliminary checks. He also burst into tears in relief when he found out that he didn't need to pay for his wife to give birth in this hospital, as he'd been contributing to the National Insurance.

This new life allowed him to indulge in his interests. A keen follower of Formula 1, he was also obsessed with computers - had been interested in them ever since he worked in a local arcade. He taught his young son all about them, though he never actually worked in computing. It was something he enjoyed, not something he wanted to monetise.

The long hours took their toll on the man, however. He took night shift work, because it paid well, but he didn't see his young son much at all. In the end he worked himself into two heart attacks. He was signed off work permanently, but had worked hard enough in all his time in this country that he'd earned himself several very respectable pensions.

In the end it was cancer that claimed him, in the way that cancer does. It crept up on him and stole him by inches. He left behind a great many friends and family.

I haven't told you his name because, when the word Immigrant gets thrown about as a headline or an attention-grabbing title, you aren't told names. There's no face, no history. No context.

Now. Every time someone talks about how Immigrants are a problem, or how there's too many, or that they should go home, I can't help but think of this one in particular. This one Immigrant, who once found a scorpion in BOTH his boots in the middle of the desert, who actually kept his very first tax form because he was so proud of paying them, who drank Bull's Blood wine and taught his son how to play cards.

This one Immigrant has given more to this country, this place, this economy than any one of the people who sit in their little chairs and read their Daily Mirror and complain about how the Immigrants have it so easy. This Immigrant, part of the tide determined to come here and crush your English values and way of life, delivered the shitty xenophobic newspapers you read your shitty xenophobic news stories in every week. He enjoyed spicy food but nothing was better to him than a genuine Sunday roast. He washed the car on the weekends, he went to the pub, he loved dogs and birds, and he loved telling awful jokes.

He was more of an Englishman than most Englishmen, despite being born and bred in the Lebanon, the ancestral home of the Phoenicians. Never bullshit a bullshitter, he taught his son - and he was one such bullshitter. They both were.

The world would be lesser without Farid Aridi. I know it. Everyone who ever met him knew it. He was impossible and stubborn and wise and generous and clingy and romantic and wherever he went, he smiled - until you gave him reason not to. He had a hell of a temper, but more than that, he had a hell of a way with people.

This Immigrant was my father, and unless you knew him - you don't get to talk shit about him.

Without this Immigrant I'd have never been born.

Immigrants aren't funny-coloured unwashed masses coming here to take your jobs and your benefits. They are people. Using them like tools to scare people into voting one way or another - in any country - is despicable. The only way my dad would be a threat to your community is if you all had too much money and too little skill at a poker table.

But then - precious few of us are actually originally from this stretch of land, if we go back in the mists of time...

...just think twice when you shit-talk immigrants, okay?